Is Teekay Tempting?

Back in January 1997, Teekay made a first class presentation to the investment community. It was a case of the right company (world’s largest and most modern Aframax fleet) being concentrated in the right place (Indo-Pacific Basin) at the right time (virile Asian tigers siring healthy, fast-growing cubs). Later that year ,the stock reached its high at USD 38 before being caught in the Asian wind sheer that brought it down to its present level (Figure 1). It is such conditions that put the test to lofty sounding company assertions like “privileged access to certain localities,” and thus far, Teekay has lived up to its reputation as a world class shipping company in every sense. However, this has not stopped investors from abandoning the stock. The obvious question is whether or not Teekay is presently a buy.

We think the answer to this question lies in how the economic problems in Asia play out. Is this just another challenging time in the recurring cycle from which strong companies like Teekay emerge even stronger? Or have Asia’s woes, directly or indirectly, contributed to change in the Aframax market structure that reaches beyond one place and one time and extends far into the future?

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